We have shown that a 4.9kb replication defective recombinant murine leukemia virus (MuLV), present in the LP-BM5 murine leukemia virus complex, is the proximal cause of a lymphoproliferative, immunodeficiency syndrome, murine AIDS (MAIDS). The defective virus (BM5def) was molecularly cloned and sequenced to reveal that the virus has a functional LTR and the gag gene is intact. Within the gag gene only the p15 and p12 are highly divergent from other MuLV. In studies of the role of gag protein(s) in pathogenicity we have found that although bacterially expressed p12 gag induced high levels of antibodies in both susceptible and resistant mice there was no induction of a protective immune response. In order to determine the consequences of constitutive expression we prepared 2 constructs of BM5def gag for use in establishing transgenic mice. One utilized SV40 promoter and immunoglobulin (Ig) heavy chain enhancer to direct the gag gene expression in B cells and although 1/8 founder mice expressed the transgene, it did not transmit through the germline. The second construct utilizes MHC class II (Ea) promoter, to allow expression in B cells, macrophages and dendritic cells. These studies suggest that high level expression of the defective virus may be toxic to cells and may provide a model for understanding adverse effects of retroviral genes on the immune system.